In a letter to fellow franchisees, the Pizza Inn Franchisee Association alleged parent company RAVE Restaurant Group is bullying franchisees into handing over control of its advertising and marketing.
The message, sent by the Pizza Inn Franchise Association Executive Committee and the Pizza Inn Advertising Plan Executive Committee, claimed RAVE CEO Brandon Solano is pressuring Pizza Inn operators into signing onto the National Advertising Fund, or entering a franchise agreement of the same effect. The group said this would give RAVE control of the ad fund and advertising decisions. Currently, franchisees have oversight of advertising and pay into the Pizza Inn Advertising Plan.
“As Pizza Inn franchise owners, we are fighting to stay in business during the COVID-19 outbreak,” said Dave Acker, president of the Pizza Inn Franchise Association, in an email to FSR. “In addition to the impacts of coronavirus, we have been fighting to survive the antagonistic lawsuits and intimidation tactics from new CEO Brandon Solano, who wants to control our business advertising. Solano has created a divide amongst the franchisees during this critical time by attempting to take control of our advertising fund and publicly stating he will not recognize our franchise association, which has been active for more than 40 years. Even in a time of crisis, he is continuing to threaten the livelihood of our small business. We cannot stand for this and must fight to keep Pizza Inn locations open to serve our communities.”
Pizza Inn increased domestic same-store sales by 2.4 percent in Q2 or a two-year stack of about 5 percent. Year-to-date (based on data from the Q2 earnings call in mid-February) domestic comps rose 2.7 percent. Revenue decreased from $1.79 million to $1.65 million year over year in the quarter. The brand has more than 150 locations and 50 franchise partners.
The Association stated that the Pizza Inn Advertising Plan was sued in federal court in Texas, but it countersued and requested an injunction be entered against Pizza Inn.
The letter noted that there is no legal requirement for franchisees to sign onto the National Advertising Fund, and that if a franchisee does sign on, it’s still obligated to pay into the Pizza Inn Advertising Plan.
In an email to FSR, Solano said he’s focused on ensuring Pizza Inn and Pie Five franchisees survive the unprecedented COVID-19 pandemic, including the launch of Pizza Inn’s “Buffet To Go” on Wednesday and expansion of delivery across both brands.
“Taking this issue to the press at a time like this demonstrates PIAP’s [Pizza Inn Advertising Plan] disregard for their fellow franchisees,” Solano said in a statement. “Pizza Inn franchisees deserve better.”
Solano was hired as CEO of RAVE in October after serving as chief marketing officer and digital officer for fast-casual concept Pei Wei Asian Kitchen. Before Pei Wei, Solano worked as chief marketing officer for Wendy’s, where he helped drive positive traffic for the first time in a decade at the time. He also worked for Domino’s Pizza, where he led the 2010 “New & Inspired” pizza launch as vice president of innovation.
The Association said in the letter that it cannot rely on RAVE to have its best interests in mind, even amid the COVID-19 pandemic. The letter recalled the past, claiming leadership mismanaged and misappropriated money from the advertising fund and took profits and royalties from food sales to invest in new brands rather than investing it back into the Pizza Inn system.
“Indeed, the misuse was so bad that we moved the accounting for the fund away from the Corporation with the blessing of its then-CEO,” the letter stated. “CEOs change, but this group of franchisees will still be here and will evolve with the marketplace. We must retain oversight and a true voice for the future of our businesses.”
According to the letter, the Pizza Inn Advertising Plan is working well, and could improve with assistance from the franchisor. It also stated that despite not having a vice president of marketing, sales at Pizza Inn franchisees are up.
But the Association claims, “Mr. Solano has looked to blame us for his perception about our brand’s performance. The blame for this needs to lie solely on the current RAVE board losing their focus on Pizza Inn, while creating a new brand competing against us and using our proprietary products in Pie 5.”
The group said it welcomes the chance to have an open conversation with Pizza Inn to find a compromise.
“We have offered to give Brandon and his marking team a trial period with the PIAP [Pizza Inn Advertising Plan] funds, evaluate results and then make a decision how to move forward,” the letter said. “We want innovation and progress. Mr. Solano refused our offer and made sure to let us know that, in his mind, the only solution for him is full control. We are certain that Mr. Solano and Corporate are trying to put the PIAP out of business through any means necessary.”
“… This group has influence, and we are better and stronger when we act together,” the letter read. “We (and our highly skilled and experienced lawyers) believe it is in the best interest of the franchisee body to have franchisee oversight and supervision over advertising and marketing. If we lose oversight to Pizza Inn, Inc., franchisees will never again regain control of our marketing dollars or decisions.”
